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GBP INR Exchange Rate Slides as Pre-Budget Fears Grip Traders

March 7, 2017 - Written by John Cameron

GBP Losses Persist as OECD Offers Mixed Outlook



The Pound has dropped against the Indian Rupee today due to uncertainty about Wednesday’s Spring Budget, which comes at a historic time in the UK economy.

As well as coming over 6 months after the EU Referendum vote to leave the EU, the budget is also sandwiched on the other side by the triggering of Article 50, which will start the Brexit procedure.

Pound traders have been understandably jittery today, and the Organisation for Economic Co-operation and Development (OECD) has only complicated matters by revising up near-term UK growth but forecasting greater turbulence further on.

High GBP INR Volatility Forecast on Imminent Spring Budget Announcement



The next source of Pound movement will be Wednesday’s Spring Budget event, with Chancellor Philip Hammond due to deliver the plans.

Hammond has personally ruled out going on a ‘spending spree’, but just what he does splash national cash on will likely determine whether the Pound rises or falls.

Defence spending is unlikely to do any good for the Pound and ignoring the seemingly astronomic rise of business rates is also something that might lower market opinions of the budget’s goals.

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On the positive side, Sterling may rise if Hammond promises a hefty sum towards social care, as is forecast, along with addressing some of the most pressing concerns about the UK during Brexit negotiations.

INR Advances against GBP on Fitch GDP Forecast



Recent Indian Rupee gains against the Pound have mainly come from a national growth forecast issued by ratings company Fitch.

Revising up its forecasts for the financial years 2016-17 and 2017-18, Fitch has estimated that India will respectively grow by 7.1% and 7.7%.

This outlook clashes with recent International Monetary Fund (IMF) predictions, which conversely see Indian growth slowing to 6.6% in FY2016-17 and 7.2% in FY2017-18. The IMF’s figures are largely based on the demonetisation panic that hit the country in late 2016, as part of government efforts to recoup unclaimed taxes due to cash transactions.

INR Forecast to Fall if US Interest Rate Hike Comes Next Week



One of the biggest sources of potential damage to the Rupee in the future will be the incoming Fed interest rate decision, on March 15th.

The rate decision could trigger a sharp Rupee downtrend if a rate hike does go ahead, given that the US Dollar is likely to jump in demand and push the Rupee down on such news.

Closer to home, the Rupee may be moved by industrial and manufacturing production figures at the end of the week, which both printed negatively beforehand and may weaken the Rupee if they remain in

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TAGS: Currency Predictions Pound Rupee Forecasts

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